‘Middle-income graduates pay the most for student loans’
July 16, 2013 Leave a comment
The impact of the new rules – only beginning to be understood now – will make graduates on middle incomes pay more and for longer, new research shows.
These are the findings of a heavyweight piece of research undertaken by political charity, The Intergenerational Foundation, published today, examining the complex new student loan regime introduced last year.
The new system – which came in as universities were permitted to charge a maximum £9,000 in tuition fees per year – means students borrow at a commercial rate of interest, higher than inflation, which is scaled up in relation to earnings above a current £21,000 annual threshold.
The impact of these escalating rates mean people in the middle pay the most – but take the longest to clear their debt. In the words of the report, “graduates toward the middle of the income distribution during their careers will find they are never able to pay off their debts in full and will be stuck making repayments until after 30 years when they reach the point where their outstanding debts are written off.”